Feed market outlook – Nov 2019

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Soyabeans in trailer

Currency fluctuations and Brexit uncertainty continue to be the dominant factors affecting UK feed costs. Global protein markets are relatively static, and recent opportunities to buy came after Sterling’s rally following the possibility of a deal with the EU, rather than any significant change in worldwide supply or demand.

“…now could be a good time to consider securing those remaining contracts…”

For any UK livestock farmers still needing feed for the winter, now could be a good time to consider securing those remaining contracts, particularly given the relatively low – compared to recent historic levels – prices. The greatest risk comes from a drop in the value of Sterling, with moves of 10–20% entirely possible at very short notice, and management of that risk will likely be the highest priority for many.

Feed price impact

Globally, the commodity feed markets are heavily focused on the impact of weather in key growing regions, with any reports of negative conditions creating the potential for prices to react. However, even here, other factors are weighing heavily, with the reduction in Chinese soyabean imports following the Asian swine flu (ASF) epidemic still undermining overall protein demand, and reports that the current 41% reduction in the swine herd may eventually reach 55%.

There has been some purchase of US soyabean by China as part of the trade talks, but as this is simply a transfer of demand from South to North America it’s  had no significant impact on the overall balance between supply and demand. Year-end soyabean stocks are set to rise again this year.

The US soyabean harvest is underway, with 62% of crop cut at the time of writing and good progress expected if the weather remains favourable. The harvesting of soyabeans will likely take priority over the more resilient corn crop in the short term. 

In contrast, the pace of Brazilian soyabean planting is well behind last year, although not too far behind normal. Current dry weather is causing some minor concern around crop establishment, but it should favour fieldwork and allow some catching up after earlier delays.

Growing protein concern

Of greater concern for many, however, is the issue of deforestation in Brazil and the environmental damage being done to facilitate an expansion in soyabean production. Recent forest fires have hit the headlines and there’s both a growing awareness of the issue within the general public, and increasing incentive for retailers to respond.

Expect more retailers to push for more sustainable sources of protein to be used in all livestock production, but with ruminants an easier target due to the greater availability of viable alternatives. Fortunately, some of those alternatives are both better value than soyabean meal and can support improved production.

UK-produced NovaPro is a highly cost-effective source or rumen-bypass protein.

At £235-255/t for delivery through to April, Novapro xlig-treated rapeseed expeller is still less expensive than soyabean meal yet provides a near identical amount of rumen-bypass protein. Potential improvements in daily yield of up to 1.7 litres/cow have also been demonstrated, due to the improved amino acid profile in relation to requirements for milk production.

For the same reason, there’s good interest in the UK-produced rapeseed expeller that’s coming out of the Stratford processing plant. It’s one of the few mid-proteins available that’s not imported, and isn’t subject to the same level of price volatility.

Cereal price influence

The picture is somewhat different for cereal prices, and the energy feeds that track those trends. Although much of the cereal and cereal by-products fed here are derived from UK-grown cereals, the price is strongly tied to the impact of export potential on supply, with Brexit uncertainty once again the main influencing factor. 

Overall, EU wheat is currently competitive on the export market, with Russia an unusually reluctant seller. Recent purchase of French wheat may push mainland European prices higher and offer the opportunity for UK exports…if weather and trade arrangements permit (the boats can’t be loaded in the rain!).

In terms of global supply, dry weather is affecting soil moisture levels – and wheat crop potential – in the Balkans and Black Sea regions, as well as central and western Argentine (recent rains were confined to the east) and most of Australia. But this is on the back of good harvests across most of Europe, so the market’s reaction has so far been limited.

For winter energy requirements, wheatfeed continues to offer good value despite a firming of prices. For those looking to capitalise on the low price of cereals, using Soda Wheat will reduce the risk of acidosis, as will adding a balance of energy sources into the ration by including one of the confectionery blends like SugaRich Dairy.

1 Prices correct at the time of writing and subject to change. Unless otherwise stated, all prices quoted are for 29t tipped bulk loads delivered on-farm within 50 miles of origin.
2 Sub-acute ruminal acidosis

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